Here are some refundable tax credits designed for low- to moderate-income individuals and families.
Non-refundable tax credits can only bring taxes payable down to zero — they cannot create a refund.
Refundable tax credits, on the other hand, are different. Even if you have no income at all, the government will provide a payment to those who qualify. Refundable tax credits and benefits can result in income tax refunds or periodic payments being made to the recipient.
Below are some refundable tax credits for low- to moderate-income individuals and families.
Householding with The Greenard Group
The wealth management divisions of Canada’s largest banks and financial institutions primarily work with individuals with higher net worth. Many of these clients also have adult children and grandchildren who might not have the same levels of income and assets.
When we begin working with new clients, we obtain a family tree and explain that once we take on a client relationship, we are committed to helping other family members — regardless of their income and asset levels.
This has been an extremely important component for our higher net worth clients as they appreciate that we are willing to assist their family. When we link family accounts together, this is referred to as householding.
Although our higher net worth clients do not qualify for many of the credits we will discuss, many of their family members do. As wealth managers supporting families, we must be familiar with all benefits and credits for individuals at various income levels.
Goods and Service Tax (GST) credit
The GST credit is a tax-free quarterly payment that helps families with low and modest incomes. The credit is meant to offset the GST that they pay. To qualify for the GST credit:
GST benefit payments are typically made quarterly in July, October, January and April and are made on the fifth day of the month.
We encourage everyone to set up My Account with CRA to obtain details on these payments and to set up credit payment reminders about one week before the payment date.
GST credit payments are based on the following:
For the 2023 base year (payment period from July 2024 to June 2025), you could get up to:
To qualify for the GST credit, your adjusted family net income must be below certain thresholds. For the 2023 tax year, the range was between $54,704 to $72,244, depending on your marital status and how many children you have.
Canada Worker’s Benefit (CWB)
The Canada Worker’s Benefit is a refundable credit aimed at lower-income workers. The credit is refundable, meaning that if the credit is above your net federal tax payable (federal tax less your non-refundable tax credits), you get the difference as a refund.
You are eligible for the credit if, at the end of the tax year, you:
You can get up to $1,590 if you are single and $2,739 for a family (2024).
If you were eligible for the credit in the prior year, the federal government will pay you half of your upcoming CWB in three instalments in July, October, and January.
Canada Training Credit (CTC)
The Canada Training Credit is a refundable credit based on your eligible tuition fees. The amount you can claim is the lesser of:
Half of the eligible tuition and fees paid in respect of the year, and
The individual’s Canada Training Credit limit for the taxation year.
Starting in 2019, you can accumulate a $250 per year limit toward the Canada Training Credit (CTC).
To accumulate the limit, you must meet all of the following conditions:
The lifetime limit you can accumulate is $5,000. The amount you claim for this credit will be subtracted from the amount of tuition fees you can claim for the tuition tax credit.
Refundable medical expense supplement
You may be able to claim this supplement if all of the following apply:
If you qualify for this supplement, you can claim the same medical expenses you claimed on lines 21500 and 33200 of your return.
The calculation for this refundable supplement is more complex. The calculation can be completed in the last section of the Federal Worksheet.
B.C. training tax credit
The B.C. training tax credit is a refundable tax credit — the credit helps reduce taxes payable to zero and can also provide a refund.
You’re eligible to claim the training tax credit if you’re:
There are three types of training tax credits:
All individuals entering the trades should become familiar with the B.C. training tax credit and the various levels. It is important to note that it is possible to claim more than one tax credit in a year, provided the requirements for each level are completed.
Child benefits
All parents with children under the age of 18 may qualify for the Canada Child Benefit (CCB) and the B.C. Family Benefit (BCFB). Additional supplements are available for low-income single parents. Children who qualify for the disability tax credit might also qualify for the Child Disability Benefit (CDB).
Kevin Greenard CPA CA FMA CFP CIM is a Senior Wealth Advisor and Portfolio Manager, Wealth Management with The Greenard Group at Scotia Wealth Management in Victoria. His column appears every week in the TC. Call 250.389.2138, email[email protected], or visit greenardgroup.com.